from washington, "the mclaughlin group," the american original. for over two decades, the sharpest

as we end the war in iraq and begin bringing troops back from afghanistan, we're making an important pivot. the world's strategic and economic center of gravity is shifting east, and we are focusing more on the asia- pacific region. >> the united states has a pacific nation, is and will remain a a pacific power in thi region. >> president obama travels to honolulu, hawaii's capital, to host apec, the asia-pacific economic cooperation conference. it will be the first meet this is year of apec world leaders. the prestigious and powerful

apec consists of 21 asian and pacific ocean nations. apec began 21 years ago. the mission of apec is to foster sustainable economic growth and prosperity apec is t foster sustainable attendees at the meeting are australia, canada, indonesia, japan, south korea, malaysia, new zealand, the philippines, singapore, thailand, taipei, hong kong, china, mexico, new guinea, chile, peru, russia, vietnam, and the u.s.a. attendees also include business leaders and academics from around the world. aggregated, these 21 nations want to be called "economy" and not "nation." they want to emphasize that

asian-pacific economic economies have no political agenda, rather, they have an economic agenda, notably, trade. these collected economies present a massive volume of power. item, apec, gross domestic product, all goods and services of 21 economies, apec constitutes more than half of the total gdp of the planet, 55%. item, apec trade. of the total trade of the planet, apec economies constitute 43%. item, u.s. ex ports through apec. apec economies constitute nearly 60% of the total of the united states' export volume. worldwide, apec may soon be repositioned ahead of the european union as world's dominant economic coalition. question, is apec at this point more powerful than the european

union? >> let me talk about europe, john, is clearing secureo zone is collapsing, europe is dying. there's not a single european nation with a birth rate that will enable it to stay alive, through this century. the new century is probably going to rth will be china and the united states. the great economies that are growing are in asia, where i disagree with you is you need a bifurcation here because the southeast asian countries, japan, korea, other nations, are deeply apprehensive over the ways of china, which is behaving like the kaiser's germany at the beginning of the last century. so i think you'll see sort of a coalescing of these countries around the united states, and a hope that the united states will remain militarily, economically and every other way committed to asia and that's what obama and mr. pen eta are trying to do.

>> which kaiser. >> kaiser wilhelm. the second. >> what year did he die? >> early 1950s but had a bad year in 1918. >> pretty well. >> the u.s. presence is welcomed in this area of the world because we do balance off a rising china. and if you look at the european economies, they're all struggling, asian economies are booming, and i think the -- white house, administration, certainly recognizes 21st century belongs to asia, and not to europe. and so there is a pivot as we are winding down two wars. president is appropriately going over there so assure them that we remain committed to asia and that all our economic problems don't mean that we're pulling back and that we're going pull back on our military presence. so -- and jobs. this is a all about job creation as well. the president just completed the south korean trade pack. they're trying to put together another free trade pack that would include japan. so this is the future

economicically, definitely. >> you can pick any of that up? >> absolutely. i just came from india two days ago, and india half the population is understand the age of 25. and that applies throughout this apec region. these are young countries, compared to europe. of course, you have eu is through alliance, apec is basically a club. it's an economic club. people with shared economic interests. but ultimately what will work for the united states' advantage is china bounded by hard powers. it's bounded by india. it's bounded by russia. it's bounded by korea. it's bound by japan. obviously to the south by indonesia. and so it's going to be a very easy sell for the united states to find partners there, to balance off china. it's not going to require i think some huge extraordinary american military presence. we've got a lot of people there who want the united states in that neighborhood and in a funny way china does to, because our presence there

assures all the other countries that china can dominate them economically but with america it won't dominate politically and provides for stability. >> it's south asia, so when you talk about asia, asia-pacific, you kind of are including india. >> absolutely. >> and it doesn't fit very well in the other blocks. >> absolutely. >> is india suffering -- i want to take a moment here on india. is india suffering from the lack of a strong government structure, and if it wishes to move say a plant would 20,000 workers and really going to build a hotel and all the -- all the infrastructure which becomes then a private responsibility of the company moving in. you have seen that. did you see that when were you there? or is the government more active now and creating things like clean water and

electricity. >> you definitely see that when you're there. one thing is multi-nationals will tell you, is everything we achieve we achieve despite the government, not thanks to the government, not with. answer able. ment of the government. it can grow despite the government. there's an understanding now that the biggest thing holding india back, especially compared to china, is its lack of governance. it's not cute anymore. i think indian entrepreneurs thans, and that's something they really have to start focusing on. and there's a movement there, in that direction. >> just to focus on china, i don't think china has military ambitions or geographical ambitions. what they do have are economic ambitions, and they're really determined and they have done an extraordinary job to rebuild that economy to grow that economy, to grow the exports of that economy. and they are doing whatever it takes in terms of infrastructure, in terms of education, and in terms of frankly penetrating abroad and they're doing a first-rate job of that. that i think will be the real threat if you want to put that

way because they have the ability to manufacture goods at very low cost, compared to what we in the united states can do. and it's really undermining a great deal of what we once used to be, which was a blue color manufacturing economy. we saw that in the first decades where we lost six million of these industrial jobs. it's a huge problem for the united states. >> exit question, is president obama determined to refocus u.s. diplomacy and worldwide attention away from the middle east and south asia towards east asia and china? >> even away from india. >> i think he is, john. but you have to realize politically in the year 2012, the middle east and israel will be a very, very big issue. but there's no question the center of gravity of the world is to asian the pacific, that region. >> center of gravity is moving there as pat says, but the center of trouble is still in the middle east. we've got the -- iran

approaching nuclearization, and you have the arab spring, awakening now really churning every government there. and so as much as the president may want to refocus from that region, the fact is the middle east has a way of yanking you back. >> right and i don't think we should be overly -- by china. they've got problems, millions of people and basics sustenance and a housing bubble that is yesterday to break and is about to break some it's that saying, the bigger you are, the harder you fall. i think china is not necessarily the big cool oses we're making it out to be. >> it's changed the debate, with this trip over there. >> yes, to an extent. but in many ways the debate was increasingly focused on asia and china and for the right reasons some absolutely the right thing for him to concentrate on that, and try to develop relationships here that do not represent just economic competition but political cooperation. >> it's new. relatively new. >> no, for sure.

but the emergence of china is relatively new. >> what kind of grade do you give obama on a foreign policy, important achievement scale? >> well, i think -- the real test for him is going to be in the middle east. and that is as we say, to come. we don't know how his policies will work up, where that's where the real threats to the united states -- in 10 years, by the way, since i believe the united states is going to come energy-efficient, self- sufficient in 10 year, because of all the new technology this we're developing for oil and natural gas, i think the roll of the middle east will decline. >> obama has had quite a successful in many respects, top three people of al-qaobama. >> meaning eck terminated. >> i give obama high marks for fulfilling bush's foreign policy. he's been very good at executing bush's foreign policy, particularly the war on terrorism, very focused. he's brought power to bear in a very smart way.

he's gotten the people he needed getting. in terms of his own foreign policy, i agree with mort, i think it's tk, the issues that he's taking on himself whether arab, or building a different relationship with china, still to be determined. i think the key thing is leverage. don't think the fact that he is carrying forward the bush- cheney policy diminishes what obama is doing? he's willing to see credibility and -- where it is. >> john -- [everyone talking at once] >> we absolutely must deal with the issue of terrorism, and i think he's right to follow it. >> politically he's reverseeds expectations, and democrats supposed to be good on the domestic issues and the economy, and weak on national security. >> we don't know how -- iraq will turn out. we don't know how afghanistan will turn out. we don't know how iran will turn out. we don't know how egypt will turn out or the middle east, israel, the whole palestinian thing will turn out. that's for second term.

>> obama has been in mediational role. >> i think a lot of what obama has done is right and i think it is wise and i think some of the things getting out of there, i think we got to get out of afghanistan and iran. but i don't know how it will -- >> win a second term? >> no, i think it's 50- >> i that's pretty good odds when you look at 9.1% unemployment! >> look at that! >> i can't observations. issue two, that used to be us. >> we should be able to agree now that it makes no sense for china to have better rail systems than us and singapore having better airports than us and we just learned that china has the fastest super computer on earth. that used to be us! >> president obama delivered those remarks roughly one year

ago. mr. obama says that when he sees the growth and innovation of other countries, he thinks to himself, that used to be us. in other words, the american dream is on the ropes. 15million americans now unemployed. 50million americans now live in poverty! salaries for americans are at the lowest in ye the decline subject book title behow amer behind the world it invented and now we can come back. the book was co-written by new york times columnist tom friedman, our guest panelist. the book's co-author is johns hopkins university professor michael mannedbalm. the authors describe the book as a wake-up call for corrective action to keep the american dream alive if thus preserve american power in the

world. the key to america's resurgence they argue is to mimic china's surging without mimicking china's politics. tom friedman, the book appears to be america has fallen behind the world, that america invented. can you give us a rap sheet on that. >> the basic argument is simple. we argue that what made america great is we had an amazing public-private partnership and the public side of that that enabled the private sector and growth these years, was bit. on five pillars. one we educated our people beyond to whatever the technology was, cot in gin or the super computers. second we had the best infrastructure, roads, airports, telecom. third when the most own immigration policy to attract the brightest minds, and most energetic people to start 30 to 40% of the companies every year in silicon valley. four we have the best rules for capital formation for risk

taking and preventing recklessness and lastly the most government funded research to push out of the boundaries of science and physics and chemistry. education, we've falling end down the international table. infrastructure, i just flew from hong kong to los angeles, it's like flying from the jetsons to the flintstones. >> you mean the quality of the airport? >> exactly. >> in hong kong? >> right. third, immigration, we basically have a republican debate. who can put up the most electric fences? the message, is go away. we want to educate you here, then gets the heck out of our country. rulings for capital in very muching? and government funded research, have you seen that? is looks like an ekg heading for a heart attack. if you like at the five pillars of our success as a country, they're all heading in the wrong direction. and therefore, we're not getting the most out of the our system. we think america is the greatest political system in the world. china today is getting 90% out

of an inferior system and we're getting 50% out of a superior system. >> so this is -- this is ledge time, go out on a ledge and take a jump, meaning is it that bad? on the wake of what buchanan says the problems r it's really a very dreary picture that is out there. >> i think it's all fixable. >> i think it's a get diagnostic and -- book full of worthy ideas. bill clinton also has a book out about how to put americans to work. but i don't think what either of you do is give any prescriptions how to penetrate the political paralysis in the country. and i think president obama if he were here would agree with everything you said. he gave you the phrase for your book. >> we do have a -- believe we may need a third party. >> we do have an ideological -- >> time for a third party [everyone talking at once] >> yes, we -- a. >> how about an independent candidate? [everyone talking at once]

>> bloomberg would not carry new york city. support a bloomberg city. obama would carry new york city. sink the candidate to whom it's closest. owners touched on, it we have an ideological and political gridlock in this country. people disagree profoundly on what to do. we can't even build that pipeline from canada down to the gulf of mexico. they're putting it of off for 17 more months. china would have that -- [everyone talking at once] >> that's because a republican governor -- >> i don't care republican or democrat! there's a deadlock! there's a deadlock! >> there's a scientlitical para >> could you build hoover dam now? no. cue build a interstate highway

system now? no, you couldn't get the permit! >> who paid for hoover dam? >> fdr did, john, he i don't want a check. >> there are! >> you can't build it bus of a -- >> this is what friedman says in his book. "our biggest problem is not that we're failing to keep up with china's best practices. but that we've strayed so far from our own best practices. america's future depends not on our adapting features of the chinese system, note that pat, but on making our lone democratic system work with the kind of focus, moral authority, seriousness, collective action, and stick to itness that china has managed to generated by authoritarian means for the last several decades. >> the point you just made. >> we don't agree, john. this is the problem. the americans no longer agree on what we ought to do. >> that's right. >>

>> it's not about solutions, it's about power. and the republicans have been very successful at creating political dysfunction at and blaming president obama for not being able to fix it. >> >> it's what is right with the country. >> what is the answer, judging from where he comes from, on the -- ladder, right? >> fortunately it's not the ledge because i ain't jumping off, guys. i'm just telling you. >> i want to know where capitalism, not in its purist form, whether capitalism is slowly running out of steam. >> i don't think so at all. i think what you have now and its implicit in what was being discusseseds is a sense that bureaucrat, and political environment is one of great inhibitors of what capitalism really can do for this country and did for many, many decades. >> do you translate that as mort saying if you had the

tenacity of purpose to fulfill the serious underwriting of capitalism, you would have what you have in your book. do you think these what he is saying, and do you believe that? >> i -- we're not that far away from what we need to be. [everyone talking at once] >> we are i think the system can work, okay? we are not that far away. we need a grand bargain right now, between the two parties. some short-term stimulus, some long-term fiscal responsibility of the simpson bowls nature. the problem is now yes the republicans have been blocking president obama. but my problem with president obama is he isn't butting that grand plan out there. that's my problem. why is that? >> he's lost the moral and political authority frankly to do that now, for whatever reason. >> for good? >> not necessarily for good. but you see the -- his approval level and the fact that he has

no personal relations with the leaders of the other party, it's just really amazing how bad -- >> the latter part that is hurting him more than anything. >> i'm sorry! >> pay attention to it. >> john, where you get the money when you republicans won't give you a nick nell new taxes for what tom friedman wants to do. >> issue three, bashing bb. >> the bond between israel and the united states is unbreakable, and i can affirm that to you today. >> but understand this as well -- america's commitment to israel's security is unshakable. our friendship with israel. and israel is deep and enduring. >> president barack obama and israeli prime minister benjamin netanyahu both say that the u.s.-israel relationship is beyond rupture. well, that claim may have been put to the test this week.

>> a report surfaced quoting an exchange between french president sarkozy and president obama, at the g-20 summit. president sarkozy said this about prime minister netanyahu -- "i cannot bear netanyahu. he's a liar." president obama then said to have said this to president sarkozy -- "you're fed up with him, but i have to deal with him, even more often than you." question, how much will this bring the u.s.-israeli partnership into disrepair, danger? >> well, i don't think it will bring it into danger. but i think there are real strains that are go beyond it being personal between obama and netanyahu. there are real strains about what is going on in the middle east and what israel should do. >> and iran? >> and iran, of course.

that's another huge issue that is at this point still under the surface, which is at the israeli feel this is an threat and the questions, what are they going to do about it. >> you want to speak to iran? >> you want to speak to iran? >> on that issue? >> yes. it's not conjecture on those reports, that it has been building a -- building a nuclear bomb since 2003, according to the atomic international agency on nuclear development. >> there's no question about it. this would have been a statement issued by the same organization years ago, if -- if it hadn't been headed by -- an egyptian who smothered a lot of this. but now that he's no longer the chairman, it came out and everybody has known this is the case. >> do you know -- >> i met him in egypt. >> do you think he's a man of honor or described by mort? >> i don't know. certainly not honor in my dealings with him, but i was dealing with him as a presidential candidate in the

egyptian elections. i think mort's point is right, that -- one of the worst kept secrets in this town is that benjamin netanyahu and barack obama don't like each other. but i think politics will trump politics. we're in a really geopolitical moment in the mete, what do for about iran nuclear issue, and israel and the united states have to work closely on that and i don't think any of this will really -- >> let me digress with tom and pay attention. here's a man who goes to the areas he covers, he was in india this week and you have written a couple columns on india. india has become a source of great interest to you. would you tell us why and what even what you found there. >> well, india is a miracle. it's 1.2 billion people, speaking a hundred languages, multiple ethnicities that come together every five years practice holds a free election. imagine if india was living like iraq, gaughan. the world would be a different place some we're blessed by

having this democracy basically that is emerged in india. second, it's a young country, and it's a country that really is on the way up. in terms of innovation, theirship. lot of exciting things going on and it's a source of stability in the world. >> do you agree with jack welch, who says the chances are that the competition between the two and the longevity of the two nations, china and india, india will win? >> well, i think both of them have strength. i don't think it's going to be so simple because china has real problems, got to make a political transition. he feels india has learned how to develop government, use government on the way to getting the kind of extensive government needs and clear up where do we go freshwater. >> optimistic? >> he says china, he feels, i don't want to put words in his mouth, but as i recall jack welch who has a big operation in bangalore, formally of ge,

heads ge for years, he says that the odds of china getting into trouble with its system and that the real internal problems there is far